Karmazin: Now About That a la Carte Idea ...

Proposes Allowing Satellite Radio Customers to Pick Own Channels

WASHINGTON (AdAge.com) -- Mel Karmazin is borrowing an idea from Federal Communications Chairman Kevin J. Martin in a bid to win approval of Sirius Satellite Radio's $13 billion merger with XM Satellite Radio -- a la carte programming.
Sirius CEO Mel Karmazin Credit: AP
Lower service price
In a speech to the National Press Club today, the Sirius CEO announced that if the FCC and the Justice Department approved the deal, the merged company would let subscribers pick their own channels or from eight programming packages, two of them family-friendly. Monthly service would start from $6.99, down from the $12.95 a month now on each service.

Subscribers then would have a variety of choices with or without premium packages such as Howard Stern, the NFL and Nascar.

Sirius' plan to merge with XM has been under attack from broadcasters and legislators, who argue it would end the competition that the two companies pledged in order to get FCC satellite radio licenses.

Consumer-control issue
Mr. Karmazin has said the radio market has changed dramatically since the companies launched. He has portrayed the savings from the combination as an important step to ensuring satellite radio can make a profit.

In the cable industry, Mr. Martin -- along with critics of cable price hikes and of broadcast content that is deemed too violent or too sexual -- have touted a la carte as a way to fight back and give viewers more control so that they aren't paying for content they don't want. Cable groups have argued such packages would make it hard for smaller cable channels to survive.

Mr. Karmazin said the radio plan would provide all the benefits of a la carte. He added that it demonstrates that costs could go down, not up, for consumers with the merger. Besides the $6.99 a month a la carte plan, the companies would also offer two $9.99 packages, though premium content would cost additional. Packages would be available with existing XM and Sirius radios, but a true a la carte plan would require new radios. He said the efficiencies created by the mergers would permit choices that wouldn't be available otherwise.

Don't be 'hoodwinked'
He suggested the merger would benefit consumers, while accusing the broadcast industry of talking out of two sides of its mouth, arguing to the Justice Department and the FCC that satellite services are a separate niche and a merger between Sirius and XM would eliminate competition, while telling stockholders that they are competing with satellite services.

The National Association of Broadcasters issued a statement warning policy makers not to be "hoodwinked" by the announcement and said both satellite broadcasters could offer packages and a la carte choices without a merger.